ENT 440/540 – 2009 – 02: Analyzing Recent New Market-Success Innovations

Ozzie Mascarenhas SJ, PhDMarch 10, 2009

We describe some recent examples of successful, technologically perceptive, at times inter-related, new product developments from various industries. We then analyze their “newness” innovation content and industry ramifications, either singly or collectively.

1. Atkins Low-Carb Diet (See Fortune, January 12, 2004, 94-104)

Thirty three years have elapsed since Dr. Robert Atkins (1931-2003) published his first diet book, Low-Carbohydrate Dieting, and the low-carb lifestyle seems to be irrevocably catching on with the Americans, the Europeans and, currently, the Japanese. The diet was derided for years as a pseudo scientific fad, but has swept these countries and regions in the 21st century, partly because some recent studies have supported its efficacy while allaying short-term health concerns, and partly because millions of low-carb dieters have quickly shed pounds after failing to do so by other pristine means. The Low-carb diet is a single topic that dominates American and Western European conversation these days - four in every ten American adults have made at least some efforts to cut carbs in 2003. Ruby Tuesday has just added 30 new low-carb items to its menu at its 650 casual dining locations.

Incidentally, Dr. Atkins died, age 72, April 2003, after sustaining injuries from slipping on a patch of ice in front of his Manhattan medical practice. The current tidal surge in demand for Atkinian diet foods is a posthumous reward and resurrection of Atkins.

The extent to which Atkins and its low-carb imitators – e.g., Protein Power, South Beach, and the Zone – have pervaded our consciousness is downright scary but intuitive. Editors at the Oxford English Dictionary are considering adding an entry for “Atkins.” The latest edition of Dr. Atkins’ New Diet Revolution has supplanted Harry Potter as the No 1 read in England. The book does not judge whether Dr. Atkins is right or wrong (the jury is still hung on that one), but is a chronicle of the euphoria and panic that low-carb mania has swept America and Europe and instilled in the business community. According to Productscan Online that tracks the packaged goods industry, companies like Atkins Nutritionals, Carbolite, CarbSense, and Keto Foods have introduced Atkins-friendly packaged foods at a rate of almost two products a day in 2003. Their products sell at low-carb specialty stores such as the Low Carb Mall, Castus, Viva Low Carb, and the latter are sprouting like weeds, already 250 by 2003. LowCarbiz, an industry newsletter started in July 2003, estimates that the low-carb industry could hit $20 billion (including diet books) in USA 2004.

The Atkins effect has gone far to reshape the $587 billion U. S. food industry. Sixteen years ago, based on a 712-page nutrition study in 1988, the Surgeon General made fat public enemy No. 1 and called on Americans to drastically reduce the amount of fat in their diets and increase dietary fiber. Americans reacted quickly: pretzel sales soared, oat-bran cereal sales rose 215% in one year, and by 1995, one out of every four new food and beverage products made some kind of low fat claim, according to Productscan. Some sturdy low-fat brands emerged: ConAgra’s Healthy Choice, Stouffer’s Lean Cuisine, and Nabisco’s SnackWell.

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Today, the American consumer, fatter than ever in a low-fat world, has turned a bilious eye on high-fiber foods like bread and pasta and a lusty taste for meats, cheese, nuts and eggs. The industry ramifications of the Atkins diet are obvious and multi-pronged. It is a fabulous time for the meat industry – meat prices are spiraling because protein-mad dieters are goosing. In addition, “beef is back in vogue,” says C. Larry Pope, COO of pork and beef processor, Smithfield Foods. Sales of Carb-free MacNut Oil, made from Australian macadamia nuts, have doubled every quarter since its launch in January 2003. Sales of eggs are up by double digits, and the wholesale price of eggs has nearly doubled in 2003. The stock of Cal-Maine Foods, the leading U. S. fresh-egg producer, was over 800% in 2003. The cheddar makers at Cabot in Vermont had their best year ever in 2003.

In 2002-2003, Atkins-inspired firms have ventured out of mom-and-pop health food stores and turned into big league American retailers. In doing so, they are competing against iconic American brands made by food giants like Kraft, ConAgra, and Nestlé, which are scrambling to figure out whether low-carb is a fad or a trend.

Pasta manufacturers are responding: the American Italian Pasta Co. has launched a low-carb pasta under the Atkins brand, and at the same time, its CEO, Tim Webster, president of the National Pasta Association, plans a conference in 2004 in Rome to position regular pasta as a “good carb.” Anheuser-Busch responded with Michelob Ultra beer that jolted the stodgy brewing world – projected to sell about one million barrels in 2003; it tripled that target. Rivals like Adolph Coors and Sab-Miller are currently playing catch-up. Keto Foods will increase its low-carb products from 140 to 212 by 2004 to be distributed in more than 40,000 stores, including Kroger, Walgreen and GNC.

Meanwhile, the $11.4 billion-a-year U. S. bread industry is steadily losing. After peaking at 147 pounds per person in 1997, U. S. consumption of wheat flour fell to about 137 pounds in 2003! Breadbaskets in restaurants across the country remain unmolested. Ron Shaich, CEO of bakery café Panera Bread, confesses that the low-carb trend is costing him 2-3% sales loss each month. According to the bread industry’s own research, 40% of Americans ate less bread in 2003 than in 2002! The National Bread Leadership Council, a coalition of bakers, retailers, and suppliers, met in Providence, RI, November (National Bread Month) 2003, to “restore people’s connection to bread.” The members remind themselves that Atkins does not condemn all breads but only highly refined white breads, bagels, and hamburger buns that cause spikes in blood sugar. Just as some monounsaturated fats are good and saturated fats are bad, not all breads or carbs can be bad.

Hence, some members see low-carbs not as a threat but as an opportunity – Breadsmith bakeries are already producing a reduced-carb bread made with soy flour; Great Harvest Bread Co. now offers low-carb bread in about 75% of its 175 franchises. Panera Bread will introduce low-carb bread in 2004. Beleaguered Interstate Bakeries, maker of Wonder Bread, are also preparing to release one in 2004. Baking giants like George Western Bakeries and Flowers Baking Group have made similar moves. However, low-carb bread that replaces carbs with proteins like soy flour and wheat glutens may lose both bread taste and texture – a challenge for bakers. For instance, starch makes bread becomes puffy; with protein you lose puffiness. Unlike carbohydrates, proteins do not play well with water, which is necessary for most food production, and turn hard and do not taste good. This is a serious problem for low-carb food makers. Much more new product research in low-carb foods in general, and breads in particular, is needed for restoring taste, texture and flavor of high-carb foods. Meanwhile, Burger chains such as Hardee’s and In-N-Out now offer burgers without bun. Table 2.1 summarizes the industry and cross-industry effects of Atkins Low-Carb Diet Innovation.

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Table 2.1: Market-Economic Analysis of Low Carb Atkins Diet

Pioneering Product

Product Design

Industry Effects Cross-Industry EffectsPositive Negativ

ePositive Negative

Atkins Low Carb Diet

Feast on high-protein foods such as meats, eggs, nuts and cheese; fast on high-carb (high-fiber) products like bread, pasta, rice and starchy vegetables

High-protein foods industry thrives. Many new low-carb imitators – e.g., Protein Power, South Beach, and the Zone. Low-carb specialty stores such as the Low Carb Mall, Castus, Viva Low Carb, sprout everywhere. Sales of Carb-free MacNut Oil, eggs, have double-digits. The stock of Cal-Maine Foods, the leading U. S. fresh-egg producer, was over 800% in 2003. The cheddar makers at Cabot in Vermont had their best year ever in 2003.

High-Carb industry (bread, pasta, rice, …) wanes. But American Italian Pasta Co. launches a low-carb pasta; Anheuser-Busch responds with low-carb Michelob Ultra beer; Coors and Miller follow suit. Keto Foods increases its low-carb products from 140 to 212 by 2004.

The packaged goods industry, companies like Atkins Nutritionals, Carbolite, CarbSense, and Keto Foods, introduce Atkins-friendly packaged foods at a rate of almost two products a day in 2003. Sales of pretzel, oat-bran cereal … sore.Some sturdy low-fat brands emerge, e.g., ConAgra’s Healthy Choice, Stouffer’s Lean Cuisine, and Nabisco’s SnackWell. Burger chains such as Hardee’s and In-N-Out now offer burgers without bun.

Low-carb bread that replaces carbs with proteins like soy flour and wheat glutens may lose both bread taste and texture. For instance, starch makes bread becomes puffy; with protein you lose puffiness. Unlike carbs, proteins do not play well with water, which is necessary for most food production, and turn hard and do not taste good. This is a serious problem for low-carb food makers.

2. SPLENDA: a New Sugar Substitute (See Fortune, January 12, 2004, 98-99).

Approved by FDA in 1999, Sucralose is marketed as Splenda. It is riding the Atkinian low-carb tidal wave.

Historically, the first sugar substitute was Saccharin discovered in 1879, still sold as “Sweet’N Low.” As a major source of carbohydrates (carbs), Sweet’N Low is a no-no for Atkinian diet fans. The next major sugar substitute was Cyclamate discovered and marketed in 1937 but was banned in the U. S. after a study found bladder tumors in rats. In 1965, Aspartame, better known as NutraSweet, was discovered and was firmly put on the world map when Diet Coke added it in 1985. Sucralose was discovered in 1976 but FDA-approved in 1999 for use in all food and beverages, and marketed as Splenda. It has taken off in the 21st century because of the low-carb lifestyle tidal wave. Currently, Xylitol, a sugar substitute extracted from corncobs and imported from China, seems to challenge Splenda! Fran Gare, 64, a close friend of Atkins for more than 20 years, who co-wrote four cookbooks with him, and possibly, the next low-carb evangelist after Atkins, has created her own line of low-carb desserts using Xylitol that she imports (three truckloads a month) from China. [See Fortune, Jan 12, 2004, p. 104].

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If you remove three of the hydro-oxygen groups from a sugar molecule and replace them with chlorine atoms, the result is generically known as sucralose and is very sweet, about 600 times sweeter than sugar (aspartame is only 180 times sweeter than sugar). More importantly, it is very stable (for instance, aspartame loses flavor under high heat). Due to its molecular make-up, sucralose does not easily metabolize and raise blood sugar levels, unlike some sweeteners, and for that reason, it has been endorsed by low-carb advocates, including Atkins.

Splenda is now found in about 3,000 products: e.g., Diet RC Cola, Starbucks Lite Frappucino, a light version of Coca-Cola’s Powerade, Ocean Spray Light, Diet V8 Splash, Light Hawaiian Punch, Blue Bunny ice cream, and Swiss Miss hot cocoa mix. Diet Coke in Japan has Splenda. From January 2004, Splenda will appear in new low-carb drinks from Snapple and Tropicana. Low-carb manufacturers like Carbolite have put the Splenda trademark on their product labels, which bestows it a seal of bona fide brand approval. McNeil Nutritionals, a subsidiary of Johnson & Johnson, markets Splenda. According to market researcher IRI, Splenda now commands a retail market share about equal to that of its two low-calorie competitors – Equal (aspartame) and Sweet’N Low (saccharin) combined. Early 2004 at her Chicago restaurant, hotshot pastry chef Gale Gand unveiled her latest Splenda creations, which include an orange-vanilla panna cotta and chocolate-peanut butter cookies. Splenda is like a new language, raves Gale, explaining that it allows her to make tasty desserts for the low-calorie crowd at her Chicago restaurant, whose clientele includes Oprah Winfrey. If Oprah can send a book’s sales to the moon, imagine what she could do for Splenda!

Colin Watts, president of McNeil Nutritionals, now intends to globalize the brand. Splenda is, indeed, a new language, a new movement, and a new market-convergence-product with low-carb manufacturers and fanatics and diabetic markets. The American food supply is overloaded with simple carbohydrates like white flour, white rice, and added sugars, especially the high fructose corn syrup found in soft drinks, sweets, salad dressings, and even canned ravioli. Americans are progressively getting carb- and sugar-conscious. According to one study, 56% of American consumers made a strong effort to curtail their sugar intake in 2002. In fact, one of the fascinating sidebars to the Atkins phenomenon is the convergence of the low-carb and diabetic markets. Splenda is a perfect example of that convergence.

3. Metabolife Starch Buster – Supports Low Carb Diet (See Sky Mall, Early Spring 2004, p. 92).

The amazing starch buster from Matabolife supports all low carbohydrate diets by reducing the absorption of calories from the starchy foods you eat.

That means you can occasionally eat the delicious foods you love such as bread, pasta, corn, potatoes, and rice without giving up your low-carb diet. No, it is a miracle, a scientific breakthrough.

Metabolife Starch Buster impedes the enzyme that breaks the starchy foods. The undigested starch just passes right through your body, along with the calories. Therefore, when you get the cravings for starchy foods, just take Metabolife Starch Buster with your meal (it comes in jars of 60 tablets) and start enjoying some of the foods you gave up on your low carb diet.

Disclaimer: These statements are not evaluated by the FDA. The product is not intended to diagnose, treat, cure or prevent any disease.

99926A Metabolife Starch Buster $24.99.

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4. Metabolife Ultra – Supports Low Carb Diet and Energy(See Sky Mall, Early Spring 2004, p. 92).

Metabolife International Inc. is the standard in the industry. This is Phase 2 of Metabolife Starch Buster. It enhances low carb diet and energy levels. The product is packaged as 90 caplets for your dietary supplement.

A breakthrough in appetite suppressant, Metabolife Ultra is formulated for sustained energy. IT helps you stay on track so that you can meet your weight-loss goals, help raise the body’s metabolism, burning fat, and not lean muscle tissue.

In fact, Metabolife Ultra contains ingredients that have been clinically tested and shown to help lose weight. In addition, it contains vitamin B-6 and other vitamins and minerals that are critical to a healthy body.

Disclaimer: These statements are not evaluated by the FDA. The product is not intended to diagnose, treat, cure or prevent any disease.

99927A Metabolife Ultra $24.99.

5. The E-Z Portable Automatic Guest Bed(See Sky Mall, Early Spring 2004, p. 8).

When home space is at a premium, the portable E-Z Bed ($299.00, Frontgate Catalog) is the answer. Unparalleled by anything before, this innovative-space saver becomes an extremely comfortable elevated queen-size bed in about 2.5 minutes flat, with little or no effort on your part. All you do is unzip the 32.5”W x 15”D x 2.5”H, and 52 lbs case, plug it in, and turn to “inflate.” It crawls out on eight legs, expands and fills with air automatically inflating as it goes. Within minutes, it becomes an off-the-floor queen-size bed with a 6-inch think mattress. Ingeniously engineered, the power-coated steel frame is topped with a sturdy PVC-backed 150-denier polyester mattress that comes with its own one-piece 100% cotton fitted sheet/bed skirt. After sleep switch to “deflate” and it crawls back into its sturdy 600-denier polyester wheeled storage case that you can conveniently wheel and stow away in a closet. Inflated, the bed stands 24 inches high. It opens and closes by itself. One year Quality Commitment. Fast 24 hours shipping on most orders.

6. The Roomba Pro Elite: An Intelligent Sweeper Vac(See Sky Mall, Early Spring 2004, p. 30).

Powerful cleaning with the least effort, this sweeper vacuum goes to work at the touch of a button, so you can stay on top of daily touch-up cleaning without cutting into your time. Features:

Simple to use: Press one button for a cleaner room (small, medium or large). The “Max clean” function tackles even larger areas or multiple rooms. The “spot clean” function concentrates on a 3-foot radius.

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Navigates on its own: it adjusts to find a clear path, detects, and avoids drop-offs like stairs. Two included virtual walls create an infrared beam the unit will not cross, to customize your cleaning area.

At your command: An included remote let you guide Pro Elite to specific areas.

Cleans thoroughly: Brushes and a built-in vacuum pick up dirt, even along walls, and the Pro Elite is small enough to slip under beds and coffee tables.

Easy to store: Wall-mount rack for off-the-floor storage.

Safe and portable: Turns off when picked up, and can be easily carried to another room. Rechargeable battery lasts up to 90 minutes per 12-hour charge. It also comes with a rapid charger (see below).

Comes with two virtual walls, remote control, wall storage rack, and all batteries. ABS Plastic. Merlot color, 3.5” H x 12” Diameter, and 7.5 lbs. Price: $249.95 (Hammacher Schlemmer Catalog #: 70426A). Additional Battery that provides an extra 90 minutes use at $59.95 (# 66633A). Rapid Charger (#66826A) charges battery in two hours for $59.95. Replacement Filters (# 67002A) changes filter every six months. Extra Virtual Wall (# 66634A) for $39,95. Extra Wall-Mount includes hanging hardware (# 70654A) for $19.95.

7. The PlasmaCluster Air Purifier – a Frontgate Exclusive(See Sky Mall, Early Spring 2004, p. 9).

With the award-winning PlasmaCluster ion technology air-purifier, the seasonal pollens and allergens, the usual pet odors, tobacco smoke, and household smells do not stand a chance. Using state-of-the-art technology, Sharp’s air purification system emits both positive and negative ions that cluster around household impurities and completely inactivates them at the deep molecular level – much the same way nature cleans the air outdoors. Competitive air purifiers using only negative ions simply weigh down an impurity without inactivating it. Sharp’s Active PlasmaCluster technology neutralizes odor and dust molecules, together with passive filtration technology that freshens air until it is clean and free of impurities.

True HEPA filtration traps airborne impurities while active carbon filters eliminate odors. Both filters lasts five years. Set on auto mode, the PlasmaCluster ion technology air-purifier starts cleaning when it detects impurities in the air. True HEPA filter with an antibacterial-coated layer captures 99.97% of particles (as small as 0.3 microns) and lasts up to five years. It automatically changes the ion control mode when it fully cleans the environment, emitting only negative ions so the room stays fresh and “balanced” as nature. The PlasmaCluster air-purifier is virtually carefree – just replace the filters every five years. Powerful yet quiet, the Sharp air purifier is among the quietest in the industry and extremely energy-efficient.

Sleek 60CX purifies the air in a 330 square-foot space. Its size is 16-inch wide, 9.5 inch deep and 22.5 inch high. It weighs 20 lbs.

11026A 40CX PlasmaCluster air-purifier (covers 253 square feet, includes odor sensor, 16” W x 22.5” H x 7.75”D) sells at $399.00.

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10998A 60CX PlasmaCluster air-purifier (covers 330 square feet, includes dust and odor sensor, 16” W x 22.5” H x 7.75”D) sells at $499.00.

8. The Peaceful Progression Wake-Up Clock(See Sky Mall, Early Spring 2004, p. 30).

Exclusively Hammercher and Schlemmer. Gentler than traditional alarms, this clock uses a gradual increase in ambient light, stimulating aromas, and peaceful sounds to awaken sleepers. Thirty minutes before the set wake-up time, the clock’s light begins to glow softly, brightening over the next half hour. The warmth from the lamp releases faint aromatherapy scents into the air to stimulate the olfactory senses. Fifteen minutes before wake up, it generates the sleepers’ choice of six soft nature sounds. A buzzer sounds at the end of the cycle. Can also be used to awaken using only sound, or just the buzzer. Four packets of aroma beads included, with ten felt disks for your own aromatherapy oils. Can also be set to operate in reverse to usher sleepers into a relaxed slumber. Snooze button, headphone jack, and volume control included. Plugs into AC, and uses two AA batteries (included) for back-up power. Size: 7.5” H x 5.25 “ W x 6.25” D (3.5 lbs). #70460A: price $49.95.

9. The Aculife (Acupoint) Magnetic Wave Therapist(See Sky Mall, Early Spring 2004, p. 97).

Acupuncture has been around for over 5,000 years and there are now over 10,000 licensed acupuncturists in the U.S. Five thousand years of proven Chinese medicine merges with the 21st century technology. Experience the power of acupuncture without the needles. Those that have tried acupuncture know without question it works.

Among the many doctors and medical associations around the world recommending the Aculife is the respected chairperson of the World Federation of Acupuncture, professor Deng Lianyue. Just 15 minutes with the Aculife is all you need to help maintain a healthy body.

All of the key points of the human body can be accessed from the points on your palm or ear to the corresponding area in your body. The magnetic pulse helps unclog micro energy pathways and improve blood circulation to help strengthen the immune system, allowing the body to better fight illness. From the palm of your hand you will be able to access every part of your body, stimulate and diagnose areas such as the heart, lungs, spine, liver, colon, bladder, and the intestines. Strengthen the immune system against hypertension, insomnia, fatigue, asthma, ulcers, hemorrhoids, high blood pressure, rheumatism, muscle pain and many more common ailments.

The Aculife is compact and lightweight enough to be taken virtually anywhere. You can even treat simple ailments like stiff aching backs, muscles and neck from travel or strenuous workouts. After 16 years in development by world renowned medical scientists Dr Xia Lei and Dr. Chiang Chih Cheng, the Aculife biowave treatment program will give you the ability to self-diagnose and treat ailments right in your own home. The key to a healthier life is right in the palm of your hand with the advanced Aculife.

Includes Aculife Magnetic wave Therapist Guide Book wit body chart, 9V battery, AC Adapter, Chip Holder, Magnetic Wave Painter with ear plug and neck strap. Gadget Alert Catalog # TH366A, priced at $299.95.

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10. Netterumani Foot Sole Patch Box to Detox your Body(See Sky Mall, Early Spring 2004, p. 92).

It relives irritating pain and constant fatigue while you sleep. Netterumani (Neru) is an alternative medicine that is based on reflexology and made from traditional oriental medicine. Neru is a revolutionary product that pulls out toxins from your body trough the soles of your feet (all of your body parts are linked to the sole of your feet).

When you use a Neru patch on the desired part of your body, it is also important simultaneously to put it in the corresponding reflect points on your sole (see referral chart in the Figure).

It relieves pain throughout your body and increases blood circulation, which ultimately helps you to get a better night’s sleep. Neru is the number one selling product in Japan for five years in a row and is made from 100% natural ingredients with no side effects.

Do not live in pain, use Neru and feel better today, says the product ad. Sixty-day money-back guarantee.

NERU – 30A Netterumani 30 Patch Box - $ 39.95.NERU – 60A Netterumani 60 Patch Box - $ 75.95.

11. The GustBuster: Metro All Weather Umbrella(See Sky Mall, Early Spring 2004, p. 95).

Come rain, come shine, you will love your GustBuster. It is unduplicated and unequaled. Unlike any ordinary umbrellas, GustBuster has seven patents to keep it that way.

Acclaimed on CNN, Fox News, NBC Today, and Live with Regis & Kelly, Dateline NBC, Good Morning America and more.

A breakthrough product of the year, it was awarded the Good Housekeeping and NBC Consumer Report 5-star rating. Certified by the College of Aeronautics to withstand 55 mph plus winds, you can walk a city street, a fairway, or a sandy beach, and you are covered.

The briefcase or purse-sized 43-inch Metro (as shown in figure) has dual back strap. Comes also as 62-inch Doorman or as a 62-inch Pro Golf Gold. The SunBLOK is a number 1 blocker of harmful sunrays that comes in 58 or 72 inches.

781016A Metro 43 inch Diameter (comes in Black, Navy or Hunter) $29.00.85162A Doorman 62 inch Diameter (comes only in black) $44.95781018A Pro Golf Gold, 62-inch Diameter (comes in black, navy or hunter) $44.95781025A SunBLOK 58-inch Diameter (comes only in silver) $39.9572172A The Beach 72-inch Diameter (comes in royal, raspberry, or tan) $29.95.

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12. Toyota Prius – The First Successful Hybrid Car13. Honda Insight – The Next Best Foreign Hybrid Car

After several years of trial and error, borrowing technology and adaptation, the top Japanese auto companies, Toyota and Honda, aligned themselves to provide mobile transportation that would increase fuel efficiency and range of travel without compromising safety and environment-friendliness. The market successful results were Toyota Prius and Honda insight, both hybrid cars that use duel energies (petroleum gas and electricity).

Toyota Prius uses a 274V Nickel-metal hydride prismatic battery where positive and negative plates are stacked rather than rolled as in a typical battery to deliver more power and increase durability. It has an on-board inverter that switches the battery’s DC power to AC power for use by the electric motor. It also changes the vehicle’s generator AC power into DC power for recharging the battery pack ( U. S. Department of Energy 2003a).

Honda Insight uses ultra lightweight materials such as aluminum, magnesium and plastic to build its VTEC-E engine. Instead of having a catalytic converter attached to the engine, Honda Insight has it already integrated into the engine to absorb the nitrogen oxides before they are released by the exhaust emissions (U. S. Department of Energy 2003b).

Both Toyota Prius and Honda Insight represent semi-revolutionary technological capabilities without affecting their respective marketing capabilities – and hence are partial “revolutionary” innovations (Abernathy and Clark 1985). Both new auto products Insight are parallel hybrids: The engine connects to the transmission, as do the batteries and the electric motor. In both, the engine and the generator/motor can supply power to the wheels, switching back and forth as driving conditions vary. Honda developed an Integrated Motor Assistant that combines a 1-liter cum 3-cylinder engine and an ultra-thin permanent magnet electric motor for outstanding fuel efficiency. Toyota developed an electrically powered splitter that hooks together the electric motor, the petrol engine and a generator, allowing each to power the car individually or combine forces as needed. Thus, Toyota Prius and Honda Insight accomplished what many established auto companies failed to achieve – adjusting to the new fuel-efficiency and environmental expectations of their target markets and countries.

Presently, both hybrids are small cars that seat only two people. Both also use the Internet market to sell their hybrids. In 2002, Honda introduced the Civic Hybrid using hybrid power train technology. Toyota intends to extend its hybrid technology to other vehicles, and even to the luxury Lexus . At the 2003 Auto show in Detroit, Michigan, Toyota featured the Lexus SUV with a hybrid power train. By 2005, Toyota plans to produce and sell the Lexus RX-330, and SU-HV (Sports Utility – Hybrid Vehicle). The RX with hybrid synergy drive will have a V6 engine with the power and torque of a V8 and will deliver fuel mileage of a compact car while producing a fraction of the emissions of the standard SUVs, said Fujio Cho, president of Toyota Motor Corporation (PR Newswire, “Toyota Motor Sales,” 1/7/2003).

Competitors (e.g., Ford, GM) are promising hybrid vehicles by 2004. Ford hopes to offer hybrid engine systems in their Ford, Volvo, Land Rover, and Mazda vehicles using Toyota technology (Wall Street Journal, 7/31/2002). In stalling or defying competitors, Toyota has announced to have a standardized hybrid system by 2012 to use in any auto market segment of its choice. Furthermore, Toyota intends to make its hybrid system the universal standard, with a Toyota subsidiary producing its systems for sale around the globe (Car and Driver (11/11/2002): “Toyota All-Hybrid by 2012?”)

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14. The PT Cruiser – A Daimler-Chrysler Success Story

Chrysler has a history of developing very innovative products: e.g., the Minivan, Prowler, Dodge Viper, PT Cruiser, and currently, the Chrysler Pacifica. However, the entry-level PT Cruiser car is an innovation in its own category. It does not fall into any standard vehicle size (such as compact, small car, minivan, economy, intermediate, large car, jeep or truck) or a corresponding price point. The PT Cruiser took some of the best attributes of these various platforms, without identifying with any one size or function or price level. Eventually, it was determined that the small car platform would develop the PT Cruiser and bring it to production. Once the concept was assigned to a small car platform, the development of the PT Cruiser would complement from other vehicle platforms (e.g., cargo space flexibility with family-seating configuration variability) that were built on the small car platform (e.g. Neon). Additionally, styling highlights were pointed out and shared by the PT Cruiser (e.g., chrome accents). Components were primarily shared with Neon to reduce complexity and product-development time.

Hence, the innovation content of the PT Cruiser is basically “incremental” despite being perceived by the public as “radical.” Several major components were manufactured or fabricated within miles of its assembly plant in Toluca, Mexico. These inventory logistics and production dynamics greatly reduced costs of production, transportation, delivery while improving upon quality – both factors that contributed to the PT Cruiser market success as an entry-level car. Moreover, through cross-platform information and technology sharing and retro styling, the PT Cruiser did not overlap its current products at the entry-level cars.

The architecture of the vehicle is nontraditional for its time (although it was retro-inspired). Its retro-inspiration gave consumers an opportunity to economically experience the past while having many of the conveniences offered in modern vehicles. For instance, consumers wanted the conveniences of a SUV and a minivan without their size or fuel consumption. From a utility point of view, the PT Cruiser entry-level vehicle makes an excellent choice for the cost conscious large family or a small business. Looking beyond its unique styling, the PT Cruiser offers a multitude of flexibility in the interior along with a surprising amount of cargo space for vehicle its size.

When the PT Cruiser was launched in 2002, consumers that owned SUVs, minivans, or traditional automobiles could identify with the vehicle, thus resounding to its success as an entry vehicle that was perceived in multiple sizes and platforms. While the management anticipated its success, they were surprised by its enormous demand, and the Chrysler Group had to augment production capacity by about 40% to meet the burgeoning demand.

Its aftermarket products further contributed to its success - built cross-plat formed, the PT Cruiser commanded an enormous amount of aftermarket products available under many platforms.

The PT Cruiser is not a “radical” innovation but a definite market breakthrough (see Chandy and Tellis 1998), and for the following reasons: a) The same technology now provides greater value for the customer dollar, and consequently, greater satisfaction; b) The customer gets higher benefits from a seemingly entry level car, and priced as such; c) the PT Cruiser has no new technology, but its cross-platform combination offers differentiation and competitive advantage. Most consumers saw the retro-styled PT Cruiser as resembling no car today. Little wonder, its demand surpassed production, and the waiting list was more than 300,000 hungry customers at one time in 2001.

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The Chrysler Group is even willing to cannibalize for the PT Cruiser success. Currently, a third version of the PT Cruiser is getting ready. [The first was the natural aspirated PT Cruiser; the second over a year later was a 2.4L Turbo version; the third model extension is a convertible as debuted]. All subsequent versions were made available to the public while the previous versions were doing very well – cannibalization can spur success, as was the case with Microsoft and Dell products (Chandy and Tellis 1998).

Focus on Future Markets: this measures the extent to which a firm emphasizes future markets, future customers and future competitors relative to the present ones. Purely current market orientation may inhibit organizations from developing major breakthrough innovations (Kohli and Jaworski 1990, p. 13). Gatignon and Xuereb (1997) found that a strong current orientation led to less radical innovations among firms. Christensen (1997) notes that dominant firms in the rigid disk-drive, copier, tire, minicomputer and mainframe computer markets stayed too close to their current customers and consequently, lost their market position to the new (late mover) generation of products. A future market focus broadens the horizons of managers and alerts them to new technologies, competitors, and customers (Moorman 1995). The PT Cruiser owes its part success to its future market orientation. For instance, the Chrysler Pacifica is a small car/minivan cross, often vehicle called a “sports tourer.” The management hoped that the Pacifica would appeal to those grown tired of the minivan but still had a large-family orientation car.

In summary, both the PT Cruiser and the Chrysler Pacifica do not represent new auto-technologies. However, the way they are assembled, styled, retro-inspired and fuel-efficient, their customer appeal places them in a new “innovative” category. Moreover, given the long history of Daimler-Chrysler’s innovative products, their “halo” effect was partly responsible for a warm consumer welcome of the PT Cruiser and the Chrysler Pacifica. [For additional information, see www.1st-look-ptcruiser.com; www.ptcruiserclub.com; www.ptenthusiast.org; www.beststuff.com; www.daimlerchrysler.com and www.motortrend.com].

15. The Ford Focus Success

The Ford Focus was the first high-volume car on a global platform developed under Ford’s Ford 2000 Revitalization Plan. The Focus represented an all-new-way of operating at Ford Motor Company. Developed as “world Car” to satisfy the demands of the European and American markets, the Ford Focus was built in Saarlouis, Germany, Valencia, Spain and Wayne, Michigan. Versions of Focus were to be sold in at least 60 countries of Ford’s world markets.

Globally rolled out in October 1999, the Ford Focus was planned as a replacement of Ford Escort in sales units and cost advantage. Ford predicted that if the Focus matched 1997 Ford Escort sales in North America and Europe, and experienced a cost advantage of at least $1,000 per unit of Ford Escort, then the Focus would save over $700 million for Ford. The Focus met these challenges largely. The Focus quickly became one of the ten best selling cars in America. The Newsweek (December 18, 2000) introduced the Focus as the replacement for the blunted Ford Escort, praised Ford for promoting it big with the trend-setting youth, and compared the Focus with the Chrysler PT Cruiser in fame and success. Four years later, in 2003, the Focus and the PT Cruiser are still in the Car and Driver’s top ten selling list.

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Within America, the Focus is targeted to an entry-level light vehicle market of female buyers, first time buyers, youth busters, trailing boomers, and minorities. Within Europe, the Focus is a midsize family car loved by families that are technology-obsessed. The Focus is segmented in the upper small class line of vehicles, typically priced in the $11,501 to $17,999 range, typical length under 180 inches, and competing against Chevrolet Prizm, Daewoo Nubira, Hyundai Elantra, Mazda Protégé, Mitsubishi Mirage, Nissan Sentra, Pontiac Vibe, Saturn S Series, Subaru Impreza, Suzuki Esteem, Toyota Corolla, Toyota Matrix, Volkswagen Golf and the Ford Escort. Style, roominess, comfort and cargo space are Focus’ sustained competitive advantages compared to its rivals. Honda Civic and Toyota Corolla pose the greatest threat to Focus in terms of perceived reliability and durability, while Saturn SL and Honda Civic post equal threat in the area of customer service, status and owner loyalty.

The U. S. auto sales of Focus were 55,846 units for the last 3 months of 1999, 286,166 units for 2000, 264,414 for 2001, and 243,199 for 2002. During these initial four years, only Honda Civic surpassed Focus’ sales (308,807 units in 1999, 306,748 in 2000, 311,314 in 2001 and 283,173 units in 2002, respectively). Competing light vehicle cars such as Saturn SL, Chevy Cavalier, Toyota Corolla and Dodge/Plymouth Neon undersold compared to the Ford Focus. (See Ward’s Automotive Report, 2003).

Ford drew an explicit blueprint for the Focus that included its global platform, global car focus, design, package, driving dynamics, comfort, fuel economy and cost of ownership. It had clear goals from the very beginning that lead to its success.

Lastly, the California Air Resources Board is in the process of certifying the Ford Focus (along with the Honda Accord and Nissan Sentra) as PZEV (partial zero emission vehicle). These vehicles are mandated to provide a 15-year/150,000 mile (241,000 KM) warranty for all emissions-related components. Currently all the PZEV models are 4-cylinder, 4-door sedans, but future plans would extend PZEV to all other vehicles. The Ford Focus’ early compliance with PZEV might additionally explain its product success.

16. Apple’s new iPod with mobile phone and Internet Connection

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Analyzing New Product Successes using Current Analytic Frameworks

At this point, we briefly state and apply some existing analytic frameworks of newness, innovation and breakthroughs to these 16 success products, leaving more detail discussions of these concepts and theories to the next chapter.

What is “New” about these Products?

Newness of products and services may be judged by several complementary frameworks. Some of these are:

a) Objective-Subjective Newness

Objectively: A new product is a product that offers new features or attributes, new values and benefits. A new product offers new core benefits, or new tangible benefits, or new intangible benefits, or combinations thereof.

Subjectively: A new product is a product that is perceived as new by a customer. The value or newness perceived by prospective consumers may be associated with core, tangible and/or intangible benefits. Perceived newness may be in relation to features or attributes, values or benefits. Alternatively, the consumers may just feel the product is added fun and excitement.

Innovations in general provide unique and meaningful benefits to products and services. Creativity or innovation is defined in terms of meaningful novelty of some output (e.g., a painting, a chemical compound) relative to conventional practice in the domain to which it belongs (e.g., abstract art, adhesives). Thus, a creative product is that which evokes a meaningful difference from other competing products in the product category. A creative marketing program (e.g., advertising) represents a meaningful difference from marketing practices (e.g., media advertising) in a given product category.

b) Newness to the product developer

From the developer’s view, commonly accepted new product categories include:

1. New-to-the-world products: these are basic inventions; e.g., the first commercial car, truck, airplane and train, Polaroid camera, digital camera, digital TV, rayon, polyester fabric, the microwave oven, the laser printer, scanner, color printer, the Internet, the WWW, ….

2. New-to-the-country: all product imports to home country; all exports to host countries.

3. New-to-the-industry as new industry convergence product bundles: e.g., all cross industry products such as cable modems, cable TV, cable radio, cable news, cable sports, cable music, cable VCR, cable phone, cable fax, cable Internet, cable stock brokerage, cable post, …

4. New-to-the firm: these are new product lines or categories introduced by a given company; e.g.: P&G’s first shampoo, Hallmark cards, AT&T’s Universal Card, Microsoft’s MSN Carpoint.com, e-Bay’s and Amazon.com’s auction lines.

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5. New improvements: by adding new features, attributes, values and benefits to existing products and services. Most new products in the world or in a given country are new improvements or differentiations.

6. New Repositionings: old products that are repositioned to new market segments; e.g., public telephones, rural telephones, jeans for toddlers and the elderly, breakfast cereals for night snacks, women’s hats are coming back, current gold jewelry craze.

7. New Use: The same basic product has a new use; e.g. plastics for cosmetic and reconstruction surgery, Arm and Hammer baking soda as a drain deodorant and a refrigerator deodorant.

c) New Knowledge or a New Market Bundle?

Innovation is the use of new technological and market knowledge to offer a new product or service that customers want (Afuah 1998, p. 4, 13). New knowledge here means knowledge that has not been used before to offer the product or service in question – it may include breakthrough knowledge (radical innovation) or better knowledge (incremental innovation) of input-purchasing-inventory-process-design-product-production-storage technologies on the one hand, and/or market-intelligence-forecasting- promotion-distribution-retailing and consumer satisfaction technologies, on the other.

d) Radical versus Incremental Innovation?

A useful classification of innovations has been that of radical versus incremental innovations (Anderson and Tushman 1990; Henderson and Clark 1990). Radical innovations are technological discontinuities that “advance by an order of magnitude the technological state-of-the-art which characterizes an industry (Anderson and Tushman 1990, p. 27). This concept is related to that of relative advantage proposed by Rogers (1983), because an innovation that is similar to existing products cannot be highly differentiated, and therefore, cannot yield a major advantage over existing products or competitors (Gatignon and Xuereb 1997).

From an organizational view innovations can be classified as incremental versus radical innovations; that is, corporate “knowledge” underpins the firm’s ability to generate innovations.

Incremental Innovations: Most innovations are incremental: They build on existing knowledge of technology or markets to innovate new processes (process innovations), new products (product innovation), or new marketing strategies (marketing innovations or commercialization’s). They enhance existing corporate competence (Tushman and Anderson 1986). For example, a “shrink” of Intel’s Pentium chip to make it run at 200 MHz is an incremental innovation since the knowledge required doing so was built on Intel’s previous knowledge of microprocessor development.

From a marketing viewpoint, incremental innovations are me-too-products, line extensions, brand extensions, and category building. Almost 90% of the new products belong to this class.

e) Technological versus Market Breakthrough?

Innovation implies at least three knowledge sets: technological, market- and business-related. All three are necessary for a successful product/service venture: the first, in producing it, the second, in marketing it, and the third for both producing and marketing it.

Technological knowledge is the knowledge of materials, components, linkages between components, methods, processes and techniques of production (e.g., sizing, packaging, customizing labeling).

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Market knowledge is knowledge of competition and substitution, distribution, logistics, pricing, promotion, channel selection and management, product use and applications, customer expectations, customer preferences, needs, wants and desires.

Business Knowledge relates to general economic climate that is largely influenced by macroeconomic indicators such as interest, unemployment and inflation rates, government policies, and international supply and demand conditions.

Hence, innovations involve three types of uncertainties:

Technological Uncertainty: information gap between what one has and needs regarding materials, components, their relationships, methods, techniques, and processes of production.

Market Uncertainty: information gap between what one has and needs regarding customers, their needs, wants, expectations and desires, their price-quality sensitivity, and their satisfaction; regarding distributional channel members, sales force, and retailers.

Business Uncertainty: information gap between what one has and needs regarding business economy, interest and inflation rates, unemployment and consumer buying power, government policies and new laws.

In general, innovation strategies, experimentation, trial and error, site testing, prototype testing, test marketing, market research and feedback, and buying information can reduce some of these certainties.

From a marketing viewpoint, radical innovations are new-to-the-world products, market breakthroughs, technological breakthroughs, brand new creations, inventions and discoveries. Only 10% of all new products belong to this category (Booze, Allen and Hamilton 1982; Martin 1995).

Some innovations involve a technological knowledge breakthroughs – a departure from previous technologies and a discontinuity. Others involve a market knowledge or market breakthrough – a departure from previously known markets – a new market. Combining both, an innovation may be a business breakthrough. All the recent new products described earlier can be assed from this threefold perspective.

Table 2.2 assesses the 15 new products described earlier with the fivefold “newness” analytical framework.

Newness as InnovationNewness of new products is directly related to their innovation content, which we next investigate.

a) Innovations as Diffusions

Rogers (1983) identifies six characteristics of innovations from the viewpoint of their adoption by consumers and diffusion through the nations and the world: a) relative advantage, b) compatibility, c) trialability, d) observability, e) complexity, and e) perceived risk. The first four characteristics are positively related, while the latter two are negatively related, to innovation-adoption (Gatignon and Robertson 1985). However, these characteristics are not independent of one another (Parker and Sarvary 1994). Of these six, relative advantage appears as a consistently important product characteristic in

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explaining new product adoption (Parker and Sarvary 1994) and new product success (Montoya-Weiss and Calantone 1994).

b) Newness as Production, Inventory, Distribution and logistics, Customization and service Management.

Innovation does not always mean a new technology; for instance, it can imply market innovation. Market Innovation is one’s ability to meet changing market conditions by using innovation to drive the market intangibles (e.g., a new niche, market void, new fad, new need) become your weapon to conquer the market chaos, find your niche and succeed (Morris 2001). This is what Wal-Mart did in outrunning K-Mart, and what Michael Dell did in becoming number one in PCs, outpacing IBM, Apple, HP, Compaq and Gateway. Most of their innovations did not imply radical new technologies: they excelled in inventory management, distribution, logistics, customization and service.

c) Innovation as entry into Old versus Augmented versus New Markets

Old and new products can be distinguished depending upon whether they respond to an old, augmented (expanded by market or brand extensions) or radically new markets.

d) Innovation as deploying Old versus Improved versus Radical New Technology

Old and new products can also be distinguished from a consumer’s viewpoint whether they provide old, improved or brand new technology that consequently, perpetuates, improves or generated radically new lifestyles

Often, timing is an innovation. Introducing a product to the market at the right time, right place, and with a right marketing mix is a non-technological innovation that becomes a definite strategic and lucrative advantage. Over time, innovations begin to migrate from their original market destination to various extended markets.

e) Innovation as Customer Convenience

Another factor that characterizes the competitive position of a product innovation is its convenience to the customer in terms of a) saved monies; b) saved time; c) saved talents (user friendly); d) saved energy (economy of use) and given (a) to (d) saved quality. Table 2.3 re-evaluates the 16 new products using these five “innovation” reference points.

Concluding Remarks

The success of each of the 16 products described and analyzed above is directly proportional to and determined by the level of “newness” and “innovation” it captures and as perceived by its target customers. Lack of these factors spells potential failure.

Another way of synthesizing and comparing the 16 products is represented in Table 2.4 using the “hard goods” versus “soft goods” dimensions of the new products, with “tangible” and “intangible” benefits under each [For definitions of these concepts, see Table 2.4]. Each of the 16 new products

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considered seems to emphasize one or another of these four features, which, in turn, may explain its recent success..

Radical innovation as new knowledge: radical technology contains a high degree of new knowledge compared with current technology and represents a clear departure from existing practices (Dewar and Dutton 1986). Some use technology and innovation interchangeably (e.g., Srinivasan, Lilien, and Rangaswamy 2002). A radical product innovation is a new product that incorporates a substantially different core technology and provides substantially higher customer benefits relative to previous products in the industry (Chandy and Tellis 1998). Technological knowledge implied in these innovations is very different from existing knowledge, rendering the latter obsolete, and “destroying” existing competence (Tushman and Anderson 1988). For example, refrigerators at one time were radical innovations based on the new knowledge integrating thermodynamics, coolants, and electric motors, which was radically different from knowledge of harvesting and hauling ice.

Hard-won customers quickly desert an incumbent firm when a radical innovation provides better performance per dollar than the incumbent’s current products (Chandy and Tellis 1998). Radical innovations have the capacity to destroy the fortunes of firms (Foster 1986; Tushman and Anderson 1986). At the same time, radical product innovation can be the source of competitive advantage to the innovator firm (Wind and Mahajan 1997), and can reap large and long-lasting profits (Geroski, Machin, and van Reenen 1993). Both new and established firms can benefit from radical product innovation.

An only small percentage of all new products is new-to-world products or is market breakthroughs or radical innovations; this percentage is as low as ten percent (see Booz Allen Hamilton Survey of 1983). Fortune also reports similar results using a study of new products from 1989 to 1993 (Martin 1995). Considering the relatively small number of breakthrough products and the disproportionate profit-contribution they make, the challenge is how to increase an organization’s ability to adopt radical innovations that build market breakthrough products (Wind and Mahajan 1997). New products, in general, are successful if the top management has a) clear goals, b) well defined strategy, c) consistent execution process, d) co-partnership with prospective customers, and e) target market-tracking. All the 15 products analyzed, if further investigated individually, would fulfill all five managerial success criteria.

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Table 2.2: Analyzing “Newness” of Recent New Products using Multiple “Newness” Frameworks

New Product Newness as Objective or Subjective

New to the:1. To the world2. To the country3. To the industry4. To the firm5. New improve-

ments6. Repositioning7. New Use

Newness as:

1. New Knowledge

2. New Market Bundle

Radical versus

Incremental Innovation?

Breakthrough?

1. Technological 2. Market3. Business

1. Atkins Low-Carb Diet

Objective & subjective

2-7 1 & 2 Radical Technological, market & business

2. Splenda – a New Sugar Substitute

Objective 1-7 1 & 2 Radical Technological, market & business

3. Metabolife Starch Buster

Objective & subjective

4-7 1 & 2 Radical Technological

4. Metabolife Ultra

Objective & subjective

4-7 2 Incremental Market breakthrough

5. E-Z Portable Automatic Guest Bed

Objective 1-4 2 Incremental Market breakthrough

6. Roomba Pro Elite

Objective 1-4 2 Incremental Market breakthrough

7. Plasma-Cluster Air-Purifier

Objective 1-4 2 Incremental Market breakthrough

8. Progression Wake-up Clock

Objective & subjective

3-6 2 Incremental Market breakthrough

9. Aculife Magnetic Wave Therapist

Objective & subjective

1-4 1 & 2 Radical Technological

10. Netterumani Footsole patch

Objective & subjective

1-4 1 & 2 Radical Technological

11. GustBuster:All-weather Umbrella

Objective 3-5 2 Incremental Market breakthrough

12. Toyota Prius Hybrid Car

Objective 1-4 2 Incremental Market & businessbreakthrough

13. Honda Insight Hybrid Car

Objective 1-4 2 Incremental Market & business breakthrough

14. Chrysler’s PT Cruiser

Objective & subjective

4-6 2 Incremental Market breakthrough

15. Ford Focus Objective & subjective

4-6 2 Incremental Market breakthrough

16. iPod 2007 Objective & subjective

5-7 2 Incremental Market breakthrough

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Table 2.3: Assessing Recent New Product Successes using Multiple Analytical Frameworks

New Product Rogers’ (1962) product-diffusion Factors?

1. Relative Advantage

2. Compatibility3. Trialability4. Observability5. Complexity6. Perceived risk

Newness asUnique:

1. Production management

2. Inventory management

3. Distribution and logistics

4. Customization and service.

Technology is:

1. Old2. Improved3. Radically

new

Market served is:

1. Old2. Augmented3. Radically new

Customer Satisfaction Attributes:

1. Need fulfillment2. Convenience3. Saving time and

energy4. Saving money

and talents5. Luxury

1. Atkins Low-Carb Diet

1-4 1-4 1 1 1-4

2. Splenda – a New Sugar Substitute

1-4 1 & 4 2 1 1-4

3. Metabolife Starch Buster

1-4 1 & 3 2 1 1-4

4. Metabolife Ultra

1-4 1 & 3 2 1 1-5

5. E-Z Portable Automatic Guest Bed

1-4 1 & 3 2 1 1-4

6. Roomba Pro Elite

1-4 1 & 4 2 1 1-5

7. Plasma-Cluster Air-Purifier

1-4 1 & 4 2 1 1-5

8. Progression Wake-up Clock

1-4 1 & 4 2 1 1-5

9. Aculife Magnetic Wave Therapist

1-6 1 & 4 2 1-2 1-5

10. Netterumani Foot-sole Patch

1-6 1 & 4 2 1-2 1-5

11. GustBuster All-weather Umbrella

1-4 1 & 4 2 1 1-4

12. Toyota Prius 1-6 1-4 2 hybrid car 1 1-413. Honda Insight 1-6 1-4 2 hybrid car 1 1-414. Chrysler’s PT

Cruiser1-4 1, 3-4 1-2 (retro

styled)1 1-4

15. Ford Focus 1-4 1, 3-4 1-2 (global platform)

1-2 (world car) 1-4

16. Apple’s iPod 1-4 1, 3-4 2 1-2 1-5

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Table 2.4: Analyzing “Hard Goods” versus “Soft Goods” Dimensions of New Products

New Products Hard Goods Commodity Dimensions Soft Goods Service DimensionsTangibles

(quantitative)(Objectively measurable

physical attributes)

Intangibles(qualitative)(Subjectively perceivable

physico-psychological

features)

Tangibles(quantitative)(Objectively measurable

physico-psychological values)

Intangibles(qualitative)(Subjectively perceivable

personal benefits)

Tangible/Intangible Properties

Quantity, hardiness,Robustness, Durability, Built-to-last, Sturdiness,

High-tech,Standardization,Metallic-plastic, Product package,

Height, breadth, Depth, weight,

Portability,Product expansion

Quality, color, brightness,

shine/sheen,Texture/fabric/feel,

Styling, retrofit,Roominess,

Spacious, sizing,Aerodynamics,

Product labeling,Product update,

Product bundlingPrice bundling

Promotions

State-of-the-art,Customization,Personalization,

Localization,Globalization,User-friendly,Networking,

Energy-efficient,Time-labor-saving,

Techno-skills-saving,Anxiety-saving,

Cost-saving, Easy-financing

Company renown,Brand name,Brand equity,

Brand community,Satisfaction-

Dissatisfaction,Excitement, fun,Total customer/

product experience,Follow-up service,

Good redressCustomer relations

Public relations

1. Atkins Low-Carb Diet

X X

2. Splenda – a New Sugar Substitute

X X

3. Metabolife Starch Buster

X X

4. Metabolife Ultra X X5. E-Z Portable

Automatic Guest Bed

X X

6. Roomba Pro Elite X X7. Plasma-Cluster

Air-PurifierX X

8. Progression Wakeup Clock

X X

9. Aculife Magnetic Wave Therapist

X X

10. Netterumani Foot-Sole Patch

X X

11. GustBuster All-Weather Umbrella

X X

12. Toyota Prius X X X13. Honda Insight X X X X14. Chrysler’s PT

CruiserX X X

15. Ford Focus X X X16. iPod 2007 X X X X

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References

Abernathy, W. and K. B. Clark (1985), “Mapping the Wings of Creative Destruction,” Research Policy, 14: 3-22.

Afuah, Allan N. (1998), Innovation Management: Strategies, Implementation, and Profits. Oxford: Oxford University Press.

Afuah, Allan N. and N. Bahram (1995), “The Hypercube of Innovation,” Research Policy, 24: 51-76.

Anderson, Philip and Michael L. Tushman (1991), “Managing through Cycles of Technological Change,” Research Technology Management, 34:3, 26-31.

____ and ____ (1990), “Technological Discontinuities and Dominant Design: A Cyclical Model of Technological Change,” Administrative Science Quarterly, 35:4, 604-33.

Chandy, Rajesh K. and Gerard J. Tellis (1998), “Organizing for Radical Product Innovation: The Overlooked Role of Willingness to Cannibalize,” Journal of Marketing Research, 35; (November), 474-87).

Chandy, Rajesh K. and Gerard J. Tellis (2000), “The Incumbent’s Curse? Incumbency, Size, and Radical Product Innovation,” Journal of Marketing, 64 (July), 1-17).

Christensen, Clayton M., Scott D. Anthony and Erik A. Roth (2004), Seeing What’s Next: Using the Theories of Innovation to Predict Industry Change, Harvard Business School Press, Boston.

Gatignon, Hubert and Thomas S. Robertson (1985), “A Propositional Inventory for New Product Diffusion Research,” Journal of Consumer Research, 11: (March), 849-67.

Henderson, Rebecca and K. B. Clark (1990), “Architectural Innovation: The Reconfiguration of Existing Technologies and the Failure of Established Firms,” Administrative Science Quarterly, 35:1, 9-30.

Rogers, Everett M. (1962/1983), Diffusion of Innovations, New York: Free Press.

Unsworth, Kerrie (2001), “Unpacking Creativity,” The Academy of Management Review, 26: 2(April), 289-98.

U. S. Department of Energy (2003a): “Technology Snapshot featuring the Toyota Prius,” Publishing Services by the Argonne National Laboratory.

U. S. Department of Energy (2003b): “Technology Snapshot featuring the Honda Insight,” Publishing Services by the Argonne National Laboratory.

Wind, Jerry and Vijay Mahajan (1997), “Issues and Opportunities in New Product Development: An Introduction to the Special Issue,” Journal of Marketing Research, Special Issue on Innovation and New Products, 34 (February), 1-12.

Wind, Yoram and Vijay Mahajan (2002), Convergence Marketing: Strategies for Reaching the New Hybrid Consumer, Prentice Hall

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Appendix 2.1: Websites of Recent New Success Innovations Analyzed Earlier

Atkins Low-Carb Diet: http://www.atkins.com/articles/nutritional-approach

SPLENDA: http://www.splenda.com/page.jhtml?id=splenda/products/main.inc

Metabolife Starch Buster- Supports Low Carb Diethttp://www.metabolife.com/products/productsDetail.jsp?id=44

Metabolife Ultrahttp://metabolife.com/products/productsDetail.jsp?id=503

The E-Z Portable Automatic Guest Bedhttp://www.frontgate.com/jump.jsp?itemID=4144&itemType=PRODUCT&path=1,2,105,1349,&iProductID=4144&k=XX23159

The Roomba Pro Elitehttp://www.roombareview.com/proelite/best-price-roomba-pro-elite.shtml

The Plasma Cluster Air Purifierhttp://www.sharpusa.com/products/ModelLanding/0,1058,1169,00.html**Note Sharp Brand.not Frontgate

The Peaceful Progression Wake Up Clockhttp://www.hammacher.com/publish/70460.asp

The Aculife (Acupoint) Magnetic Wave Therapisthttp://www.gadgetuniverse.com/product_detail.asp?SKU=TH+366

Netterumani Foot Sole Patch Boxhttp://www.foot-patch.com/111.htm

GustBusterhttp://www.gustbuster.com/

The Toyota Priushttp://www.toyota.com/prius/

Honda Insighthttp://automobiles.honda.com/certified/model_overview.asp?ModelName=Insight&ModelYear=2006

The PT Cruiserhttp://www.chrysler.com/pt_cruiser/

The Ford Focushttp://www.fordvehicles.com/cars/focus/?v=html

Apple iPhonehttp://www.apple.com/iphone/

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Homework 02: ENT 450/540 – 2009

1. Choose five products or services chosen by industry experts to be the most innovative or market/technological breakthroughs since 2005. Describe them. Cite the sources that declare so, and specify the reasons for their ranking. Specify your reasons.

2. Next, explain their success using industry and cross-industry analysis as suggested in Table 2.1.

3. Reassess the five products using the analytic framework of Table 2.2.

4. Reassess the five products using the analytic framework of Table 2.3.

5. Reassess the five products using the analytic framework of Table 2.4.

6. Hence, summarize your arguments explaining the market success of each of the five products. How could you improve them to ensure their continued market success?

Terms:

You may work in groups.

Due on March 26, 2009.

Present a hard copy. Post your hard copy on mascao37@gmail.com.

Present your results in class on March 26, 2009.

This assignment carries 20 marks.

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